Fogo de Chao (NASDAQ: FOGO) and Sonic Corp. (NASDAQ:SONC) are both small-cap retail/wholesale companies, but which is the better stock? We will compare the two companies based on the strength of their risk, analyst recommendations, dividends, institutional ownership, earnings, valuation and profitability.

Valuation and Earnings

This table compares Fogo de Chao and Sonic Corp.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fogo de Chao $304.00 million 1.19 $52.73 million $0.79 16.20
Sonic Corp. $515.82 million 1.93 $158.68 million $1.50 15.88

Sonic Corp. has higher revenue and earnings than Fogo de Chao. Sonic Corp. is trading at a lower price-to-earnings ratio than Fogo de Chao, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Fogo de Chao has a beta of 0.36, indicating that its stock price is 64% less volatile than the S&P 500. Comparatively, Sonic Corp. has a beta of 1.74, indicating that its stock price is 74% more volatile than the S&P 500.

Dividends

Sonic Corp. pays an annual dividend of $0.56 per share and has a dividend yield of 2.4%. Fogo de Chao does not pay a dividend. Sonic Corp. pays out 37.3% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of recent ratings for Fogo de Chao and Sonic Corp., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fogo de Chao 0 3 3 0 2.50
Sonic Corp. 1 7 4 0 2.25

Fogo de Chao presently has a consensus target price of $16.42, suggesting a potential upside of 28.26%. Sonic Corp. has a consensus target price of $27.64, suggesting a potential upside of 16.02%. Given Fogo de Chao’s stronger consensus rating and higher possible upside, research analysts plainly believe Fogo de Chao is more favorable than Sonic Corp..

Institutional and Insider Ownership

85.7% of Fogo de Chao shares are owned by institutional investors. Comparatively, 97.5% of Sonic Corp. shares are owned by institutional investors. 82.8% of Fogo de Chao shares are owned by insiders. Comparatively, 6.2% of Sonic Corp. shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Fogo de Chao and Sonic Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fogo de Chao 7.40% 8.08% 4.58%
Sonic Corp. 13.23% -44.21% 9.71%

Summary

Sonic Corp. beats Fogo de Chao on 11 of the 16 factors compared between the two stocks.

Fogo de Chao Company Profile

Fogo de Chao, Inc. is a United States-based holding company. The Company, through its subsidiaries, operates upscale Brazilian churrascaria steakhouses under the brand of Fogo de Chao. The Company owns 100% of Brasa (Purchaser) Inc. (Brasa Purchaser), which owns 100% of Brasa (Holdings) Inc. (Brasa Holdings). The Company operates through two segments: United States and Brazil. It specializes in fire-roasting meats utilizing the centuries-old Southern Brazilian cooking technique of churrasco. The Company offers its guests a tasting menu of meats featuring up to 20 cuts, simply seasoned and fire-roasted to expose their natural flavors. The Company operates approximately 26 restaurants in the United States, 10 in Brazil and one in Mexico. The Company operates a range of restaurant formats, including in-line and free-standing locations. Its restaurants range in size from approximately 7,000 to 16,000 square feet, with seating from 200 to 500 guests.

Sonic Corp. Company Profile

Sonic Corp. operates and franchises the chain of drive-thru restaurants (Sonic Drive-Ins) in the United States. As of August 31, 2016, 3,557 Sonic Drive-Ins were in operation from coast to coast in 45 states, consisting of 345 Company drive-thrus and 3,212 franchise drive-thrus. As of August 31, 2016, its restaurant design and construction consisted of a kitchen housed in a one-story building, which was approximately 1,500 square feet, flanked by canopy-covered rows of 16 to 24 parking spaces, with each space having its own payment terminal, intercom speaker system and menu board. At a Sonic Drive-In, a customer drives into one of the parking spaces, orders through the intercom speaker system and has the food delivered by a carhop and Sonic Drive-Ins also include a drive-thru lane and patio seating to provide customers with alternative dining options. Its food items include specialty drinks, such as cherry limeades and slushes, ice cream desserts and chicken sandwiches and hamburgers.

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